Reference no: EM132930750

Questions -

Q1. The following apply to Simon, a single individual: In July, year 2, Simon sold for $12,000 Section 1231 property acquired by Simon in December, year 1 for $7,000.

In February, year 2, Simon inherited from her parents Section 1244 stock, which had cost her parents $5,000 and was worth $10,000 at time of inheritance. Later in year 2, the stock became worthless.

In May, year 2, Simon sold for $17,000 Section 1231 property Simon had acquired in January, year 1for $10,000.

As a result of the above, what is Simon's net capital gain (loss)?

A. $0

B. $2,000

C. ($3,000)

D. $7,000

Q2. Decker, an individual, owns 100% of Acre, an S corporation. At the beginning of the year, Decker's basis in Acre was $25,000. Acre had ordinary income during the year in the amount of $10,000 and a long-term capital loss in the amount of $4,000. Decker has no other capital gains or losses during the year. What amount of the long-term capital loss may Decker deduct this year?

A. $0

B. $1,000

C. $3,000

D. $4,000